Pakistan Power: Generation numbers keep marching on, (AKD Daily, Oct 30, 2019)
- Strong Sept’19 CPPA generation data (at 13.6GwH, up 9%YoY) takes cumulative 1QFY20 generation to 41.9GwH (up 18%QoQ/4%YoY) showcasing the benefits of additional generation capacity being on-boarded, primarily centered on Coal and RLNG based additions
- Coal/RLNG based generation remained prominent during 1QFY20 (14.7/22.9% vs. 10.5/23.3% in 1QFY19) and FO based generation remained muted (5.0% vs. 9.8% in 1QFY19) completing a period of rapid energy transitions
- EPP/KwH for the quarter averaged PkR5.5/KwH with RLNG/Coal power cost averaging PkR11.66/5.92/KwH (+13%/-12%YoY) where Brent benchmark, PkR vs US$ movement and enhanced thermal efficiency of generation by source have kept a lid on weighted average generation cost
- We remain upbeat on HUBC’s prospects for augmenting profits from recent expansions (CPHGC operating at 72.4% load factor in Sept’19 vs. 18% in July’19) where Coal generation receivables are expected to be smoother than FO (higher position on Merit Order List) while CPHGC benefits from majority ownership by a foreign sponsor (State Owned China Power International) making for significant sponsor clout. These catalysts make our base case for the firm resuming regular payouts (despite a hefty project related debt load by 2HFY20, a clear checkpoint for price performance.
AKD Research
Hub Power Company is a holding company. Through its subsidiaries, Co. is engaged as a power producer in Pakistan that focuses on developing, owning, operating and maintaining power stations. Co. supplies electricity to Water and Power Development Authority and National Transmission and Despatch Company under long term Power Purchase Agreements for its Hub and Narowal plants respectively.
AKD Securities Ltd. is one of the leading securities firm in Pakistan, providing a comprehensive range of investor focused services, including equity brokerage, economic and securities research, investment banking and financial advisory services. AKD Securities accounts for more than 6% of the average daily value of the Karachi Stock Exchange. AKD Securities was the first brokerage house to launch an online trading platform in Pakistan in November 2002 and now has the largest market share with over 6000 customers. This has helped diversify and expand the retail investor base in the country and ushered in a whole new universe of investors to the stock market.
AKD Securities Ltd. caters to a diversified group of domestic and international institutional investors, high net worth individuals and upscale retail clients, including expatriate Pakistanis. With high quality research, unparalleled execution and distribution capability for both regular and large block trades, AKD Securities Ltd. has earned an outstanding reputation in the Pakistani securities industry.Outside of commercial banks, AKD Securities Ltd. is one of the biggest capital market firms in the country. AKD Securities is the leader in raising and providing risk capital in underwriting, market making and mergers and acquisitions in Pakistan. Good corporate governance and professionalism are emphasized throughout the firm and AKD Securities Ltd. is amongst the very few companies to have introduced a firm-wide comprehensive CODE of ETHICS, overseen by an independent compliance manager.Ultimately, our success is based on the quality of service we provide to our customers and the trust and confidence reposed in us by them. Our focus, therefore, remains on customer satisfaction at all levels in the company.
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